European session review: USD strengthens as U.S. Treasury yields rebound
09.04.2021, 12:00

European session review: USD strengthens as U.S. Treasury yields rebound

TimeCountryEventPeriodPrevious valueForecastActual
06:00GermanyCurrent Account February17.6 18.8
06:00GermanyTrade Balance (non s.a.), blnFebruary13.8 18.1
06:00GermanyIndustrial Production s.a. (MoM)February-2%1.5%-1.6%
06:45FranceIndustrial Production, m/mFebruary3.2%0.5%-4.7%
07:30United KingdomHalifax house price indexMarch0% 1.1%
07:30United KingdomHalifax house price index 3m Y/YMarch5.2% 6.5%
11:00United KingdomBOE Quarterly Bulletin    

USD appreciated against most of its major counterparts in the European session on Friday as the U.S. bond yields rebounded from two-week lows, as inflation concerns resurged following faster-than-anticipated Chinese data on the producer price index (PPI) for March. 

The National Bureau of Statistics (NBS) reported on Friday the factory gate prices climbed 4.4% y/y in March, the steepest annual pace since July 2018. Economists had forecast a 3.5% y/y rise for March, following a 1.7% gain in the prior month. 

Benchmark 10-year Treasury note yields jumped five basis points to 1.67% early Friday. On this backdrop, the U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, rose 0.20% to 92.25.

The assurances from the Federal Reserve Chair Jerome Powell on Thursday that the Fed had the tools to curb accelerating prices were not enough to calm the inflation worries. Speaking at the event hosted by the IMF yesterday, Powell said that he expected any inflation resulting from economic recovery to be “temporary”, but if prices move "persistently and materially above levels we are comfortable with" the central bank has the tools to curb them.

The market participants are now awaiting the release of U.S. PPI data, due at 12:30 GMT. Economists expect the U.S. producer prices to increase 0.5% m/m and 3.8% y/y for March.

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